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Slow gains extend for clean rates: CPLP

31 Jan 2018 21:17 GMT
Slow gains extend for clean rates: CPLP

New York, 31 January (Argus) — Tanker rates will continue to rise from depressed levels on tightening market fundamentals in 2018, shipowner Capital Product Partners (CPLP) said today.

"Looking ahead, analysts estimate that net fleet growth for product tankers will slow to 1.6pc in 2018, while on the demand side analysts expect growth of 3.8pc", the company said in its quarterly earnings report.

The orderbook for medium-range (MR) product tankers, the work-horse in the Atlantic basin market, sits at record lows of about 8pc of the total fleet, accounting for the slowing fleet growth.

On the demand side, CPLP pointed to rising US products exports and growing intra-Asian products trade as key sources of continuing growth.

"Increased clean petroleum products export quotas issued by China, combined with robust refinery margins, encouraged refineries to boost refinery runs and push more products into the export market, therefore stimulating demand for product tankers", the company said.

Despite the firming outlook for clean tanker rates, freight costs remain weak overall. MR rates are at about $14,000/d, up from a multiyear low of $12,000/d but well below the high of $20,500/d seen in the summer of 2015, according to company data.

"The product tanker spot market saw continued improvement in the fourth quarter of 2017, albeit at a modest pace", the company said. The company operates 21 MR tankers.

CPLP's fourth quarter profit dropped to $6.7mn from $13.7mn in the same period in 2016. The decline was partially the result of increased vessel operating costs, as well as weakening rates for the company's four Suezmaxes.

In addition to the tankers, CPLP owns 10 neo-Panamax containerships and one capesize bulker.